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hello, this is today's worldwide exchange. >> alcoa kicks off the earnings season with better than expected numbers. the aluminum giant says it sees brighter days ahead. european stocks are boosted on the news, and banks and telecom stocks lead the way higher as report suggest europe's biggest teleco groups are in talks to create a pan regional network. analysting warn about slowing growth. the cfo told cnbc he's confident. >> we've got a great track record, frankly, over the last five years of delivering, you know, over 100 million pounds cost savings year on year. we intend to do that going forward. and a report says the bank of japan will likely cave to heavy pressure and double its inflation target to 2%.
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all right. you've got to make the most of us today. >> last day today. >> only two days -- >> until next week? >> until next week. a lot of good things coming up. particularly, we talked about the dollar, when it comes into play. there's a tweet conversation going yesterday, they are coming on air. >> i like that, education the conversation from twitter -- >> we've -- >> on air. >> exactly. that's what we're doing. >> it's interesting. we have seen the dollar rallying. the question is will it last, tell become a theme for 2013. >> exactly. >> a couple of other things we'll explore. the latest news in tech from sin city. the consumer electronics show is getting into full swing. we'll also be live on the ground in madrid as spanish banking
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giants meet with unions about job cuts. and ubs executives testifying on the stands and culture of the swiss bank. then we'll head to detroit for the latest on boeing after fuel leaks and a fire involving their 787 dreamliners and a boston airport. >> and oil, as well. asia demand is growing, the oil price may act as a break in the world economy. the energy revolution will have a global impact in oil flows toward asia. and the global shift is underpinned by huge energy investments. we are going to be talking about u.s. energy. >> yeah -- exactly. we're also seeing reports about how u.s. oil import will be at the lowest in 25 years. there is a change afoot. >> i guess that's what the iea head is saying, asia is going to
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take more of the u.s. demand. to earnings. yes, alcoa swung to a fourth quarter profit matching forecasts. results were helped by stabilizing raw aluminum prices. higher prices and cost cutting. revenues down 1.5% to $5.9 billion. that did beat estimates. alcoa is also slightly boosting its 2013 global demand forecast from 6.5% to 7%. kleinfeld says growth in china is coming back and europe is doing better than expected. the stock up 1.3% in after hours. in frankfurt, up 1.72%. join for the first hour, for the first time this year, charlie diebel. hello. good to see you. right. here we are. we've kicked off earnings season. what do you make of it? >> well, it's only just begun really. i mean, i think that there's still risk of a disappointment trade. if you look at the retail numbers particularly going to
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the christmas season, they looked disappointing. i think there still could be bad news to come. but equally, we're still playing with a lot of the macro issues we were playing with last year. you know, we've had phase one of the fiscal cliff, but it seems to be breaking down into five or six different phases over the next few months. and you know, as you were saying, you still have a situation in europe where the economic outlook is pretty fragile, and we're a long way from complete resolution -- >> but what about the risks -- that quarter, big asset, right? >> we haven't tested the system yet. >> i said we got rivet of the terrorists. -- got rid of the terrorists, we priced them out. >> right. but, you know, kind of getting into it here. for example, the spanish auction schedule that we're facing over the first half is pretty onerous. likewise, there's the threat of downgrades for not only spain but other countries in the
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eurozone, and an awful lot of supply coming. if at some point that starts to reapply pressure to the peripheral bond markets and you see yields going up, you're back into this risk of episode. does it last, maybe not. then the ecb and omt come into play. that's an untested mechanism at this point. >> i wonder, is there anything to the notion of zigging when l alcoa zags? the company starts thing opposite to how earning season turns out. >> i think there is a risk that earnings season disappoint. given that they if anything narj mally beat what was -- marginally beat what was expected. but as i say, it's a long road. >> for sure. we don't really get into the thick of earnings season for a good couple of weeks this time around. charlie will stay with us. and we are later going to discuss what's going on with boeing's dreamliner flights. just now, japan's all nippon
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airways has canceled a domestic flight due to brake problems on a boeing 787. comes amid a spate of similar reports. we'll have more detail and explore the story further in the next hour. >> we don't know whether that means they couldn't take the brakes off or put them on. >> we need more detail. and despite recent mishaps, japanese carriers appear to be standing by boeing at least for now. japan airlines says it has no plans to drop orders for the 787 dreamliner jets. it ordered a total of 45 aircraft including seven in operation. all nippon airways which placed orders for 66 dreamliner jets also says -- it has said it's sticking with its purchase. staying with japan, the bank of japan is reportedly considering further monetary easing this month. according to reuters' sources, we might see the bank doubling its inflation target to 2%. there's been speculation for months. in your view, is it going to happen? and almost more importantly at this point, given the run-up
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we've seen in equities, can they get there? >> i think that is actually the more important question. you know, you can have any target you like, but given the inability for japanese authority, whether the ministry of finance or bank of japan, to create any inflation over the past two decades -- >> right. >> to say, we're going to have a 2% inflation target -- >> as if that were the only problem. as if only the inflation target were higher things would have been different. >> clearly that's not the solution. it would appear they're pulling away from applying a time frame. it's an aspirational target almost. you'll have a 2% target eventually. >> if they achieve this, will it be disaster for the japanese bond market is. >> clearly. because that means after two decades, they would have actually succeeded in a re-inflationary policy. now the burden of proof is to
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the contrary. they've failed so far. keep in mind that this is essentially a fiscal spend type scenario. and that's going to be debt financed, and japan has almost a 200% debt-to-gdp ratio. you know, that is a natural break on how aggressive they can be. >> right. >> just -- i was interested to look at the difference in performance between japanese bond yields and treasuries since the fed minutes, as well. and also we've seen what happened to dollar dlsh y/yen, from last week. are we going to trade dollar up against the yen? i mean, what's the target and the story? >> i think the japanese authorities maybe not explicitly but there's a very positive side effect of managing to weaken the yen with talk about the re-inflationary policies and almost the whatever-it-takes stance. are the u.s. and japan locked in a currency war?
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arguably that is sort of what's going on. there was a report the other day from the cabinet office in japan suggesting that the move that we've seen in the currency so far should add about .2 to gdp this year. obviously an export-oriented economy. if they succeed in weakening it further, obviously that's going to be good for the economic outlook. but historically, if you go back to previous episodes, the strong fiscal expansions that you saw, when you saw really strong policy measures taken, that actually inflated the nikkei. it started to bring in hot money to japan from things like hedge funds. you saw the yen appreciate. >> exactly. >> i think this initial reaction to weaken the yen is all well and good. but if it catches fire in the nikkei and assets aren't moving -- >> depends what becomes the main driver of currency markets. you know, it depends whether yields stop being the main driver for currency markets or whether growth takes over. >> absolutely. >> also we've seen japanese
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companies being more aggressive. on the m&a front you think of sprint offset. if that inflows from investors that might stabilize or cancel the effect of the yen. >> for me it's not so clear cut that they're going to could? blanket yielding the yen. >> what do you do with japan now? >> in the short term we're cautious because the proof of the pudding will be in what policies get agreed and what the plan is. there's a lot of smoke and mirrors going on with what they're putting into the economy. in the short term we're cautious and think the yen might recover a bit. but if they truly follow through and you do see some sort of coordinated action, you'd have to expect the yen to weaken toward the 90 area over the next few months. >> right. sunday your thoughts here if you have -- send your thoughts here if you have questions. e-mail us at ross? >> thanks. let's check in where we stand. over an hour to trade in the european session, in ten minutes to be precise. weighted to the upside. we've got advances outpacing
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decliners by not quite 7-3 on the dow jones. european markets now again going back to their recent highs. the ftse 100 up 25. the xetera dax up .3. the aka cac gulp. and yields 4.3%, 4.08 in spain. no real moves. german bund 4.5%. we get fresh issuance coming out of the u.s. and the currency market, 87.60. rebound after profit taking on this cross rate earlier in the week. that 29-month high was over the 88 level. euro/dollar, we've traded between 1.30, 1.50, 1.32 the last couple of weeks. that's where we stand in europe. we have the latest out of asia.
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thank you. a mixed day of trade finish asian borses. the nikkei snapped a two-day losing streak ending .7% higher. talk as the boj set to ease its monetary policy this month by boosting its asset purchase program. after a brief pause yesterday the yen weakened against the u.s. dollar again today fueling automakers and other exporter stocks. elsewhere, the shanghai finished flat as investors remained cautious ahead of trade and cip data due out. reports that more property curves will be made itted to tame rising housing prices. agricultural stocks surged on expectations that beijing's urban growth plan will support food production. in hong kong, the hang seng rebounded half a percent from the lowest level in the week. mainly banks gained momentum after ubs upgraded icbc. concerns over q4 earnings sent the kospi lower by .3%.
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the fifth straight day of losses for south korean shares. i.t. stocks and development ralliers pushed higher .4%. lastly, india's sensex in action, trading a touch below the line. back to you. >> all right. thanks, catch you later. as we head to break, you should head over to our web site to find out why a number of economists believe tomorrow's ecb rate-setting meeting could mark a key moment in the evolution of the eurozone debt crisis. and forget alcoa in the u.s. earnings season. watch out for europe's corporate performance. more on that story. also, go to for the latest on the online hacking of u.s. banks and why the u.s. government thinks iran is behind it all. keep your eyes that. still to come, ubs executives due to testify before the british parliament today on the libel scandal. we'll have a preview when we come back. what are you doing?
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welcome back. spain's largest bank is meeting with labor unions in an attempt to reach an agreement on job cuts following its merger with
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banesto. joining us is spain correspondent at thompson reuters. sonia, thank you very much for calling in. we want to get a sense of how many job cuts -- how many jobs are at stake here. and whether they'll be successful pushing it through given opposition to unions and political opposition, too. >> this is part of a wider malaise in the spanish banking sector in terms of jobs. this merger is related to its domestic subsidiary. unions say they're looking at between 3,000 and 4,000 jobs going here as a result of this merger. s santan der has not given a figure. generally speaking, in the spanish banking sector there are job losses up as a result of the european rescue. spain's biggest state-rescued bank is looking at laying off
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around 6,000 people as a condition of receiving european aid. and there are protests scheduled across spain today. both employees taking to the streets to protest the job cuts. >> we've seen in france the difficulty that automakers have had in shutting down production which everyone says is needed to write right -- to right size the profitability. in the banks, an easier sector to malign if you're the government. how do you ensure their future if you can't downsize now? >> the talks have just started now. i don't know whether they will have much difficulty pushing them through. it's part of what's happening across the board in spain here. figures have come out for 2012. spain's got the highest
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unemployment rates in europe or one of the highest. it's neck in neck with greece. during 2012, over 2,000 jobs per day were destroyed here in spain. so a country with a population of, you know, around -- under 40 million. so it's -- there's more than six million unemployed in spain now. that's 1/3 of the unemployed in the eurozone. people are just beginning to see it as inevitable that there are going to be job losses. and in the banking successt-- b sector, spain had one of the most overbanked high streets in europe. you walk down a spanish street, and you see four or five bank branches. it's just an inevitable part of the ratification of the banking system here. they just have to reduce the amount of branches on the
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street. >> a reminder of the negative cycle to some extent spain is stuck in. sonia dowsett for thompson reuters. thank you very much for that. a reminder, when she says, look, they lost 2,000 jobs a day in a nation of 40 million, 1/3 of the eurozone's total unemployed. we learned yesterday the unemployment figures, 26.6% unemployment rate for spain. higher than greece which granted was latest reported as of september. at 26%, it may yet strike back. but extraordinary. >> yeah. yeah. i mean, that is -- there's a depression statistics basically. in the u.k., the british finance minister, george osbo e osborne, wants the e.u. to toughen bank regulation across the 27 member states. britain's set plans in motion to separate retail investment decisions in part on proposals from the finnish central bank governor. the fed is also reportedly considering a plan to help banks avoid costly regulations aimed at preventing derivatives trading from being subsidized by
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taxpayers. the "financial times" says it stems from the lincoln amendment, included in the 2010 dodd-frank law. it prohibits banks that have access to federal deposit insurance or fed credit from acting as derivatives dealers. u.s. banks will still be able to trade some products like interest rate swaps. under the rule, foreign banks would be forced to move their u.s. derivatives activities off their books. >> yeah. if you followed that, you get a gold star this morning. it's a tricky one. >> there's a law that means foreign banks will have problems trading derivatives in the united states. >> charlie, any thoughts here? >> you know, it's part of this broad regulatory framework being put in place. and it's what banks all over the world are having to contend with. the problem is is that it -- it stops activity, and it stops banks doing what they're supposed to do which is effectively providing the liquidity and lubrication if you like to keep the economy going and to get economic activity on the horizon. so they're busy focusing on
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regulation rather than doing what they're supposed to do which is linked. >> this goes to the point that we've made with guests which is how do you push forward on regulation at a time when it means undermining growth. and unfortunately there's not a great answer. it just means that the bank lobby, for example, whether in the u.s. or other countries, is able to say and to have considerable success in saying, look, if you push forward, you're going to be shooting yourself in the foot. >> yeah. we've seen that already. that's why the easing of regulations and capital requirements to go with that are a positive new england for the outlook from a macro point of view. that should encourage banks and their ability to lend and, you know, puts less onerous restrictions on how much capital and how many assets they have to hold almost as dead weight. >> on that note, we want to ask you -- is this a prudent move or another example of banks getting their way with regulators? you can join the conversation here on the show by e-mailing
4:24 am you can tweet us @cnbcwex or individually. >> yeah. what's going on here -- sorry. no plan for a merger with o pal. >> the pressure for them to pick up the stake. going back to the point that in spain the unprofitable spanish banks resulting in job losses piling up for the company. in fran the unprofitable auto industry resulting in job losses. peugeot says we understand the pressure to pick up later. >> weak carmaker don't nesties n >> weak carmaker don't nesties n necessarily make a strong -- dent necessarily make a strong carmaker. and in a letter to the f.t.
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urged reform to a single market but warnings britain has to be careful not to rethink its total participation. the british prime minister, david cameron, expected to lay out a plan to renegotiate britain's e.u. membership later this month. and europe's top teleco companies reportedly discussing an idea of creating a pan breaking news telephone network. it's seen as disjounted and hindering their ability to compete. report said the idea of sharing infrastructure was discussed at a private meeting between the e.u.'s competition chief and bosses of europe's biggest teleco groups. spanish companies are capitalizing on lower yields and a newfound confidence in the ken. telefonica has raised 1.5 billion euros through sale of a ten-year bond. this in one of the first debt sales in a major european country this year. the group has about 7.5 billion worth of debt redemptions worth in 2013. a reminder it's not just the spanish sovereign that has to
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raise funds. the second largest bank has tapped the bond market selling 1. billion euros of senior debt last week. and you can read this as a better sign for spain or an indication of just how far investors are willing to reach in order to get yield in these times. >> yes. probably go for the latter. aig says it has an obligation to consider a demand by former ceo frank greenburg to join his lawsuit against the u.s. government. the company board is meeting later today. greenburg's suit claims the u.s.' $182 bailout of aig deprived shareholders of billions because the government took a 92% stake and then imp e imposed high interest rates. the suit also argues the rescue violated the fifth amendment to the u.s. constitution over illegal seizure of private property. >> and we're told that they to some dig have to go through the review. it's not necessarily a sign they'll move forward with it. this is getting tons of attention in the u.s. with aig thanking u.s. taxpayers now --
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>> the current board -- >> for supporting them. >> the current board supporting them. the old board that's trying to -- >> still upset. share your thoughts, keep it coming. stay with us also because we'll be back after this break.
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and these are the headlines from around the globe -- alcoa kicks off the earnings season in the u.s. with better than expected numbers. the aluminum giant says it sees brighter days ahead. european stocks boosted by the news, and banks and telecoms leading the way higher as a report that europe's biggest teleco groups in talks to create a pan-european network. and the u.k. gross, slowing sales growth. >> we've got a great track record over the last five years of delivering, you know, circa 100 million pounds of cost savings year on year. we intend to do that going forward. >> the report says the bank of japan will cave to pressure and double its inflation to..2%. all right, an hour and a
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half into trading day in europe. you see we are up, the ftse 100 up, the ibex up, as well. we're getting trade data out of the u.k. november adjusted global goods trade deficit, $9.2 billion. the global goods trade balance for october unrevised, a deficit of 9.5. we have a narrow that's slightly. but the original forecast was nine billion. >> sterling up .1%. i love this -- three-month goods export volumes to the european union down 3.7% on the year to outside the european union, they're up almost 7% on the year. it just really tells you where the demand strength is in the global economy. it's not coming from europe which is the u.k.'s biggest trade partner, historically still credibly important relationship -- incredibly important relationship but a drag for them. >> the quicker they can rebound the better. right? >> and that's what's been going on frankly. over the past few years, you
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have seen somewhere close to 60% -- >> down 50 at the moment. >> now below 50% in terms of the trade ratio. >> does that account for the changing political rhetoric here, as well, the fact that we're hearing more noise from, say, the conservative-led coalition about ending the relationship? >> it's bound to be part of it. i think that really it's more of a natural reweighting away from the eurozone as a part -- and reflects where global demand is. >> if you were an engineering company britain, you know, millions whatever, you'd weigh -- you just going to go for whatever the growth is, right? doesn't matter. >> no. i think this is and obviously should be encouraged. but i wonder, again, whether that exposes sort of the political narrative to people that feel like, well, what's in it for us. >> i think the bottom line is, i think any poll at the moment would suggest that the majority of certainly people in england, i'm not sure about scotland, would be, you know, all for
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renegotiating in terms of e.u. membership. i think that would be -- >> that seems to be what the polls are saying, absolutely. >> do you think that's prudent or should people be reminded of the advantages to being part of the european union? >> and there are. if we sit in isolation in the u.k. and you have a huge trade block that you have nothing to do with, that doesn't make send either. you know, the devil lies in the detail as to exactly what kind of e.u. you've got, what the relationship is. you know, you cannot ignore europe. it still matters -- >> the bottom line is the e.u. is changing. >> especially with regard to the way that financial regulation is changing, being the biggest thing at stake potentially for the city here. just also want to bring you some news here which says a blast furnace restarting in northern france. this the site of i believe it was a fire recently. the restart in response to a slight increase of steel demand in europe due to restocking. >> this is the plant that the
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french government got upset about. >> criticized -- that's right. >> they were shutting it down. now clearly, this is the point, though, there's a slight pickup in demand. they're saying that's why we're doing it -- >> not because you told us to. >> the french government. >> exactly. >> what -- it got very personal, didn't it? >> yes. we heard them directly criticizing it. in any case, that's going to restart. another volatile day of china's insurance. shares slumped after falling 4% yesterday. they did recover this afternoon. you see them up about a percent there. reports say hsbc's $9.5 billion stake -- sorry, sale to a thai conglomerate town in jeopardy. the paper says they're set to veto the deal since they're not sure who's funding it. the chinese insurers under pressure this week after a u.s. private equity group, carlisle group, said it was selling off its stake in china pacific
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insurance. now to look at the sector and why some foreign investors may beexiting, chief china strategist at macquarie joining us from hong kong. appreciate it. can you give us a sense as to whether we're reading too much into this or is there is behind something that we're seeing of late? >> it's a good thing for cdb to be back out of this long deal because if there's speculation that some chinese investors are behind the deal and the fact that cdp is going to fund the deal will make the deal look not like an arm-length deal but a grand scheme of things, we continue to like the insurance sector as a whole. >> through some of the companies, what about pingon in particular? >>'s recognized as a neutral. although the name is pingon insurance, i want to make it
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clear, half of the profits come from its bank. pingon is half bank, half insurance, they also have a brokerage business. in the secular preference, the picc, automotive insurance and casualty insurance side on, the life side we like china pacific. >> several companies there. >> yeah, in terms that we're still developing obviously the business in china, what's the -- how mature would you destroy it compared to the west? what do they still need to do? >> insurance is clear in many areas. that's underpenetrated in china. the challenge for the chinese insurance industry is that the insurance products are sold more or less like savings product in china. and in the last year and a half, the rapid growth of the management product have pulled away a lot of deposits from the insurance industry. that's why the insurance industry has suffered a lot in
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the last year and a half. we have seen a couple of cases or debacles with respect to the wealth management products may have now made the consumers questioning the merits of some of those products, leaning more toward perhaps buying insurance products instead. >> general insurance, is general insurance picking up as opposed to the savings side? >> that's what we believe. we also believe the asia market this year may have a very good year after three, four years of tough times. to play the rally in the asia market, the best place either insurance companies or brokers. we like both sectors now for the 2013 china strategy. >> thank you very much for joining us. chief china strategist at macquarie. stay with asian financials. a new report for the nikkei says that japanese trading houses are again boarding their reach in
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iraq after staying away for two years because of the conflict. we have more from tokyo. hi, ross. after nearly two decades of barely maintaining a presence, japanese trading companies are now beginning to expand their businesses in iraq. the nikkei reports that mitsubishi will set up a joint venture with iraq south gas to build a processing plant in southern iraq. it will use gas produced in an oil production process and recycle it into natural gas or lpg. the total investment estimated at $17 billion. meanwhile, toyota will open a new office in baghdad this spring and will handle car sales in its infrastructure-related businesses. there's a plan to open more sales and repair shops for cars and construction machinery. many japanese companies had business based in iraq and other middle eastern countries in the 1980s. they were forced to close their offices after the gulf war in
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1991. what we're see regular fresh attempts to tap into the resource-rich country once again. back to you, ross. >> thanks for that. dish network is making an unsolicited $2.3 billion offer for clearwatch, trumping a $2.2 million bid by sprint wireless. dish would pay more than sprint's $2.97. they want to buy the rest of the company. clearway says it's preliminary. the deal would require sprint's approval and they stay isn't viable. there's talk that charlie jurgen is serious but other say he's amassing to flip for a big profit. clear why dish and sprint stock in play. the big winner clearwater. >> after this was announced -- at ces last night, interesting, only up 9%. >> they were known as a soft
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bank. >> exactly. >> and what they're doing -- >> remember, it was after the soft bank capital infusion that sprint was able to say we're going to go ahead with the buyout. and there was a btig analysts saying it should be higher valuation. at the time people said, well, there aren't necessarily other bidders. we'll have more on this chat next hour. >> people wondering about the whole soft bank deal. you know, and whether that puts us under threat. >> the huge deal. >> that was having impact on the yen yesterday. >> exactly. >> that was kind of in the market. microsoft says sales of windows 8 has hit the 60 million mark ten weeks after the launch of the new operating system. pretty much in line with sales of windows 7. that came out in 2009. remember 2009? microsoft wouldn't say how many surface tablets were equipped with windows 8 have been sold. the company introduced the tablet as a competitor to the ipad. microsoft stock up half of 1%. >> down 11% over the last three months. apple is working on a
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cheaper iphone. it could hit the markets this year. the "wall street journal," that rag, says the device may use less expensive materials such as a plastic shell. this would mark the first time apple has diversified its smartphone lineup with significantly different modies since launching the first -- models since launching the first in 2007. there's been speculation. apple shares are move being half a percent higher in trade. as you see, they've been hit harder than microsoft over the last three months. down about 18%. >> extraordinary run. >> i know. yeah. the ceo is in china today to meet with the country's leading government officials. tim cook's second visit to apple's fastest growing market in less than a year. the tech giant sold more than two million iphone 5 handsets. they need to tie up with china mobile, the biggest teleco firm, to improve distribution. they declined to say whether cook is meeting with the provider on this visit. the key thing, kelly, the fastest gro market. they were down in the last survey in november. they were waiting for the latest
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launch. at that point, i think they were at the six -- down to sixth place, right, in the smartphone market. >> exactly. it's lack of penetration into the chinese market is one of the main things apple has been criticized for, and perhaps one of the things spurring this new cheaper iphone if it comes to that. now, panasonic may cut its headcount and sell noncore assets in a bid to raise cash and turn around its business. speaking at the consumer electronics show in vegas, the president said the tech firm is looking to form joint ventures in its struggling operations to help bring back growth. he promised to deliver details of the revival plan by the end of march, saying units that can't hit a 5% operating margin in two years will be shut down or sold off. what else is going on behind the scenes at ces? we have a look. >> reporter: there's a lot to see at the consumer electronics show. tvs, smartphones, p.c.s that swivel all the way around. probably the biggest theme out of the show altogether is the
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smartphone as mobile hub. ten years ago, it was all about the p.c., connecting to web cams, becoming a universal remote. now all that function is built into the smartphone, and there are increasingly ways that this is a remote control for our daily lives. look at samsung's washing machines or at harmon's cars where they use a smartphone to enhance the experience. >> it is remote controlled and enabling a network in the car. if you're using at&t or verizon or sprint, you'll have to change -- you won't have to change. you'll connect. you make the car a hot spot and use your same program. you don't have to subscribe to a program for car and program for your phone. we make cars so that they will work with any phone, whether it's a motorola, samsung, or nokia or apple, and any provider. >> the reason that is possible is because smartphone penetration in the u.s. is up near 50% with android and the iphone as the main drivers of
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that. expect that to be a trend that we see for the next couple of years now that manufacturers know there's probably a smartphone in your pocket. all the gadgets around you can do that much more. >> john ford there. ubs' former chief executive and the current head of the investment bank are among the ubs executives testifieding today before the british parliament. now, in fact, as you see right there. this inquiry focuses banking standards following a spate of scandals at the lender including manipulation of libor and a rogue trading loss that cost the company some $2.3 billion. we'll be listening in here and there. so far, what we've heard from ceo of the investment bank is that ubs management is very focused on recovering "honor and standi standing" that the bank had in the past. we're keen to hear from him detail as to the shutting down essentially of the -- of the, ross, thick operations and focus on shifting the nature of ubs itself. we'll bring those comments to you as we continue to get them. we'll take a short break.
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it's been a big week or so of retail reports in the u.k. the latest today, how's it going. will it be festive cheer ahead?
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welcome back. a quick update on a story we're following this morning. now dow jones is reporting that that the all nippon airways flight we earlier told you was canceled, a boeing 787 domestic flight, was due to computer brake system problems. still not clear much beyond that what is happening. >> no. we'll keep you up to speed with that. french investigators will look into whether there was a secret bank account in switzerland. we have more. tax exiles, secret bank accounts. it's all going on. >> there's no proof yet. there's an investigation which will be launched by the paris prosecutor. in december the news web site media part reported that the french project minister had a secret bank account in switzerland before 2010. the report is based on the
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recording in which the bankth is mentioned at ubs. the budget minuteser is rejected action zagds -- minister is rejecting accusations and saying the recording is not his voice. he filed a legal complaint against the web site reporting the story and welcomed the announcement yesterday of an investigation which he believes will help prove his innocence. the preliminary investigation in france will take a couple of months. it will lead to either being placed on the formal investigation, in that case it will be difficult to remain as minister. the second option would be the case to be dropped for the time being. not resigning and received yesterday the support from the president hollande. stay there. gerard depardieu is in the news again about avoiding drunk driving charges. he's said to be too busy to show up in his film in which he
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plays, get this, former imf chief dominique strauss-kahn. what more can you tell us about this story? >> it was indeed supposed to -- he was to appear in a french court to appear guilty for drunk driving charges but couldn't make it for professional reasons. depardieu was arrested by the french police in november. he had a small scooter accident and 1.8 gram of alcohol in his blood, 3.5 times the maximum for france. perhaps it's due to the size of the man. he's facing a maximum jail sentence of two years and milwaukee -- and fine of 4,500 euros. he tries to joke about the situation. >> translator: i'm not a criminal. i just skidded on my scooter. i fell asleep. even when i eat a salad with too much vinegar, i already have too much alcohol in my blood. that matter is settled. all is well, and i can return to my home, to france.
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there are no problems with that. the police like me a lot. >> i didn't know you couldn't get drunk with vinegar. perhaps he's not using the same brand as i'm using myself. the reason why depardieu was not in paris yesterday is that indeed it was negotiating the budget for his next film in which he will play dominique strauss-kahn, another french story. >> thank you very much for that. there must be a type of vinegar also that i don't know about. >> extra strong. i thought if you drink enough -- >> of anything? >> it will have some impact. >> extraordinary. got more on hon hai, investigating employees in china on bribing and supply chain partners. i remind you, the hon hai group saying the group aggressively pursu pursued. they're cooperating with police on the case, as well.
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the informers reported suspicious accounting records to support accusations. we'll have -- they're now investigating it effectively. meanwhile, in the u.k., the slowest sales growth posted in the christmas quarter, up .9% year on year. despite the numbers, ssainsbury saying he's confident. >> we have a pipeline of stores doing exceptionally well in the current environment. you can't survive in this industry unless you continue to cut costs. we've got a great track record, frankly, over the last five years of delivering, you know, circa 100 million pounds of cost savings year on year. we intend to do that going forward. >> and joining us with more, founder and managing director at neeve capital. thanks for joining us. how tough is if for the gross? tough for morrison's. we get tesco tomorrow. >> i think it is tough and goes beyond the economy.
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i think what's happened is to some extent people are prioritizing spending on other things over food. you've seen so much food inflation the last two, three years that people almost prefer to spend it on treat like apple, for example, or clothing. what that actually has meant is people are discovering or rediscovering that it's cool enough to shop, and people have discovered you can get good quality stuff at really much cheaper prices. and i think in other terms, what people are doing is they're shopping on convenience. they want to go? where closer to them. they don't actually like the big stores. sometimes you're tempted to buy much more stuff that you didn't want any-- anyway. therefore, those stores -- >> they're doing less of the big shop and more of -- if i used to go once every two weeks to the enormous supermarket, now i go a couple of times a week. actually that way i'm -- my money's going out, small amounts going out more frequently. >> exactly. i think that's happening. the fact is some of us are getting older, as well. therefore we don't like navigating the huge --
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>> oh, no. no, no, no. >> the exact same thing is happening in the u.s. one reason why you've seen shares in dollar stores, which have added consumables, a lot of the milks and food items, do really well even as walmart, for example, has suffered. >> how does that explain weight traders doing so well, up market? >> i think it does well. i think you're seeing a bifurcated market. the same time it's becoming cool for the middle class. i think the upscale people who still like the whole food providence like to know where chicken came from. they're completely stealing the market. those people still care about food providence. to kelly's point, the same is happening with whole foods in america. it is cleaning out compared to everyone else because there is a subset of people who care about it -- >> don't be in the middle. >> pretty much. i think almost everywhere the mainstream grosses are struggling. they've also got there because of problems. let's not forget all of these guys in the u.s. and the u.k., all the mainstream grocers, as well, prioritized margins over sales the last few years. all of them despite a difficult
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economy led inflation climb to high levels. >> and we heard waitrose telling britains that food pricing will be rising sharply. charlie, have you seen this? >> we had brc data out this morning that -- overnight i should say that was, you know, saying that the current rate was 1.5%. now, that's fine, but if you compare it to how real incomes are doing, that -- that's quite a hefty impact. and that's -- you know, that probably explains this sort of bifurcation you're talking about between, you know, those that have plenty of money can still go to waitrose. everybody else is becoming more selective. >> i want to pick up away from the food guys. from sort of the general clothing guys. what's clear is you -- you have to go with the winners, john lewis is doing well, next -- these guys have strong high street but have cracked the online market. is that -- are those the winners, guys that got that -- >> very much so. >> high street band with a really good online presence? >> very much so. i think if you didn't have that,
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you were -- the margins will not do well, hss, not winners. john lease extremely good at click and collect. they're trying to show it's not just on line, it's convenient online offer which is you can offer here on line, but you can go in at your convenience to pick the order up and shop. again, that's the advantage over amazon and they're playing it. next is another point. i think zara blending the offer. even some further behind, the in-store sales waffling. they weren't good. they had good christmases, up 5% or 6% because their online sales were almost big, big numbers. >> not bad. and after christmas you worry about -- if you're worried that you'll be in had something gets delivered knowing that it's there. >> i'm convinced one of the reasons we've seen chain store weakness in the u.s. is because people are spending more on food. >> yeah. >> retail sales overall haven't been as weak. thank you very much. meanwhile, quickly the head
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of the international energy agency says the u.s. is undergoing an energy revolution that will have a global impact. speaking at a conference in o o oslo, maria vanderhuven says sales may act as a break in the world economy and that 80% of e.u., china, and india energy use will depend on imports by 2035. although the u.s. is clearly going the other way. charlie, what happens with u.s. asset prices this year? >> when you say asset price, you mean equities -- >> equities and -- yields actually, treasury yields. >> i mean, you know, you had someone on the show earlier who said let the ingredient -- the bond bull market is over. and that over time eventually yields have to go up. to a degree that's true. but that is all centered on the concept that policymakers succeed. now we've had four/five years of policymaker intervening in the markets to try and generate this economic recovery.
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so far we haven't got any traction. and each time the scale gets more and more. i think for the time being, we're still in that policymaker action-driven low. thereby the fed's going to continue doing q.e. i don't think particularly as you still have further fiscal cliff issues to come, i don't think it's a really bearish scenario for bond. >> good to see you. thanks. lloyd's banking markets. >> it latest on ubs after we come back.
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welcome to "worldwide exchange." if you're just tuning in, i'm kelly evans. >> i'm ross westgate. these are your headlines -- alcoa kicks off the earnings season with a better than expected report. the aluminum giant says it sees brighter times ahead in 2013. and bank and telecom stocks easing the way as reports say europe's biggest telecom groups in talk to create a pan-regional network. dish network throws a wrench into sprint's plans to buy clearwire, making a higher bid for the wireless provider and owner of valuable spectrum. a report suggests that bankers will cave from pressure from the prime minister and double inflation targets 2%. let's quickly check in with u.s. futures.
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the dow jones industrial average is pointed higher by 14 points this morning. similar gains, about three points on the nasdaq. a little bit higher for the s&p 500. we've seen a weaker tone to equities this week. but the report from alcoa last night may be helping to spur optimism. we like to ask our guests whether they see it as a reason to zig when alcoa zags when it comes to earnings. look at the ftse cnbc global 300 for a sense of what's happening. up .1%, a quiet overnight session, led higher by some degree by asia. here's what's happening with the european borses. footse 100 up, higher for the xetera dax yesterday. the cac up ever so slightly. the ibex 35 adding to gains, up half a percent. a mixed picture across the board. certainly not a session where you see a lot of strength one way or the other. >> holding steady, that's what's happening with bond markets and currency markets now in europe. thanks. ten-year yields below 1.5%,
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5.1%. have nudged slightly higher in spain. this is where we stand on treasure yields, 1. 87. on the currency markets, dollar/yen we did see it improve post comments out of japan. 87.52. so a lot of profit-taking this week. that has stopped this morning. well over 88 with that 29-month high that we hit. and euro/dollar, .3. trading between 130, 1.31, 1.50, not much to kick it out. let's remind you what's happened in asia. if you've just woken up, we have the news from overnight in singapore. thanks, ross. a mixed day of trade finish asian borses. the nikkei snapped a losing streak ending .7% higher. talk is that the boj is set to ease its monetary policy this month and double its inflation target to 2%. after a brief pause yesterday the yen weakened against the u.s. dollar again today, fueling
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automakers and exporter stocks. elsewhere, the shanghai composite finished flat. investors remained cautious ahead of trade and cpi data you do out. cement makers were the losers following reports that more property curbs will be needed to tame rising housing prices. but agricultural stocks surged on expectations that beijing's urban growth plan will support food production. in hong kong, the hang sane rebounded about half a percent held by strength in mainly banks. mgm china soared 7% on news that it has received approval from the government to build a new casino in the kotai strip. concerns over earnings sent the cosby lower .3. the fifth dee of losses for south korean shares. elsewhere, i.t. stocks rallied pushing the asx higher by .4%. lastly, india's sensex just shut shop, ending lower by .4%. back to you, ross. >> thanks for that.
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alcoa swung to a fourth quarter profit matching forecasts as results were helped by stabilizing aluminum prices and higher sales to the aerospace sector and cost cutting. revenues down 1.5% to $5.9 billion. that also beat estimates. alcoa has also boosted its 2013 global demand forecast. it's now 7%. previously 6.5%. the growth says clikleinfeld ber than expected. the stock up 2.4% in frankfurt, up 1.3% after hours in the united states. coming up in the next half-hour of the program, we'll go inside alcoa's latest report with senior metals and mining analyst at clsa. we had a chat yesterday on twitter. this after several analysts have come on the show. i've had three in the space two of days predicting that eventually this year the u.s. dollar will big a psychic likal play and -- cyclical play and
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will rise with the s&p 500 pushing against the backdrop of a stronger u.s. economy. many have pointed to divergence to the s&p 500 and euro/dollar trade as evidence of things to come. so as i said, this has become a discussion on twitter. and two protagonists join us. chief global strategist at ctnx. from new york, managing director at b.k. asset management and a cnbc contributor, as well. g gents, i enjoyed our chats yesterday. thanks for picking up on my original comments. we had barclays, you know, and then independent strategy were the firms that came out and said toward the second half of the year, we could see this trifecta happening. boris, how plausible is that from where you sit? >> i think that's definitely the current trend going on in the marketplace. everybody picked up on this note mainly because the divergence between the euro and s&p has really accelerated. and i think there are a lot of reasons for it. primarily the key reason now is
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we're entering into a phase of what i call every man for himself environment. every government -- we used to after the 2008 crisis, most of the global -- central banks and global governments came together and coordinated policy, fiscally and monetarily. now everybody's following their own different path. i think that you've seen a divergence that's going on. now the dollar supercycle, king dollar thesis, rests on an interesting idea. basically there's a virtual cycle in the u.s. that u.s. economy is now becoming the engine of global growth. and as u.s. economy continues to expand, yields are going to improve for the right reasons. yields will go up because growth is going up, not because of inflation. and that was going to create more capital flow toward the dollar and more capital flow toward the u.s. equity assets. you see this kind of a trend that has not been in place for the last four years where the u.s. dollar and equities could go up in tandem. whether that's going to be the case still remains to be seen. i'm a little -- prii'm skeptica because i see the biggest risk
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in the u.s. economy not economic but political. as everybody's been talking about, the debt ceiling crisis is going to be the next big hurdle that we overcome. if that passes without much problems, i do think that thesis could be real. if we get into a situation where we have massive stand ooff and that creates a stall in the u.s. economy, that could go out the window. >> we have been here before with this -- >> we have been here before. i'm looking at the analysis and feel like i'm in january 5, 2012. so many smart people said the dollar is going to go up. the yen is going -- the yields are going to go up, stocks are going up because of the cyclical advantage driven by the u.s. that didn't happen. i think this trifecta could actually happen. but for a brief period of time in the second half. it will happen. whenever you see some hawkish minutes from the fomc, several members with -- in english, one or two, don't want to extend the asset purchase until the end of the year. that might be a good boost for the dollar. it might be good for yields.
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but in the currency market, there is something called the dollar. the dollar does not move in itself against the yen which this thesis is going to go up because of the abe story and because of him forcing the bank of japan to go more of a re-inflationary trade. what about this thing called the eurozone? there's a good chance that greece growth is going to hit positive. not because there is a great improvement but because of what we have in the u.k., because of the comparative. a quarter against quarter. italy might hit also positive. and then there is also the possibility that the credit rating agencies going to start to upgrade one of the peripherals. when that happens the euro is not going to tell the u.s. dollar go ahead because of the trifecta. the euro is likely to cap those dollar gains. so the thesis sounds good. it makes perfect sense. but it does not behave by itself. i think the euro is going to try to spoil that story. >> boris?
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>> you know, actually, on a very near term, i think dollar/yen is grossly overbought. if you look at dollar/en yen on technicals, only three to four times over the last five years has it been at these high overbought levels where the rsi was above 75. every time it corrected. it doesn't mean that i think the rally is over. but i think we definitely have a reasonable chance here. we're probably going to try to go for a double top at around 88.40. then we'll correct toward 85. i am dubious about whether the boj is going to be able to create the kind of inflationary pressures that's necessary in order to move dollar/yen higher. but it does speak to this point of what i call, you know, fracture, every man for himself situation. look at abe. abe's been the most nationalist leader that japan has had in a long time. he's following very much policies that are japanese positive. i think that's what happened the last three, four years is japan sat around the sidelines and watched as the fed pumped and pumped and devalued the dollar. they couldn't take it anymore at this point. his election in many ways is a reflection of the japanese
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saying enough, we're not going to have our -- your currency devalued and us being more competitive. >> and again it's important to have a discussion without ignoring this thing called the euro. after the u.s. elections when obama won, you had the risk aversion trade, stocks came down, but actually the risk metrics in the eurozone were much better. that means bond yields in the eurozone went up by less than the s&p fell and the euro fell in percent animal terms by less, then stocks went down and bond yields in the eurozone went up. that is thanks to the man that was elected the man of the year, mr. januaandraggy. he was able it do it without doing the omt. that capped the rise in bond yields in the eurozone, supported the euro, and that's the main reason why, the
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correlation between the euro and the s&p kind of weakened to the favor of the euro. and if the thing that i mentioned this year will happen, which is basically, you know, the gdp growth in greece may come back up, i think that will be good for the u.s. >> boris, response briefly. >> yeah, but you know, we can play the same game on the euro side where we -- we heard that story over and over again. what we have, moderation of periphery yields, euro rallies, then again we have another flare-up of the crisis. so my question is, will the spanish be able to refinance all of their debt? will italians be able to finance their debt? i think a lot of the positive compression of periphery yields is in the euro. now i agree, i don't think the dollar is going to have a massive rally against the euro unless there's a major source of friction in the eurozone as we go forward. i think a lot of the benefit that the euro has seen has already baked into the cake. i agree with you that in a sense, yes, dollar could rally
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more against the yen than against the euro, but nevertheless could strengthen against both if we clear the hurdle of the political problems in the u.s. >> i agree. >> thanks. by the way, this started on a twitter conversation we had yesterday after comments that i made. i looked at your photo, boris. look, who's this guy -- who's that guy on the left? right, where was that? >> exactly. >> barcelona? >> that was taken in barcelona, i believe. >> right. >> two or three years ago. we were at a conference. >> no idea who the guy on the right is. we know the two on the left. thanks for joining us. >> that's todd gordon, contributor for cnbc. >> is it -- oh, yes. i hadn't focused there. >> "money in motion." >> i can't believe they cut you out of the picture, ross. wasn't nice. >> they're not allowed to use, you know, they hadn't paid to use me. to use my likeness. couldn't fill it in. thanks for that. good to see you. boris schlossburg, as well.
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thank you both. good photo. you guys haven't aged. >> so kind. stick around -- >> only taken last month. >> straight ahead, flu season has arrived early. and it's hitting people extra hard. just how can you inoculate your portfolio against the virus? we'll take the temperature of possible flu stock winners and losers. ♪ [ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it.
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welcome back to the program. these are your headlines -- alcoa eases global growth fears with better than expected earnings. >> european shares cheer the fourth quarter earnings season. and dish network with an offer for clearwire in a bid to grab valuable spectrum. we told you we're following comments from head of ubs investment bank who's testifying in the u.k. today. a couple of flashes for you. he says ubs believes everyone involved in the libor scandal has been appropriately dealt with and that, in fact, 18 staff have left or been fired due to the scandal. he said "we entered businesses that were too complex to manage, and we're moving toward a more human organization that's also more focused." he said the firm underwent massive growth and entered busy that it didn't know well -- businesses that it didn't know well. the industry needs to change,
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and that management is focused on recovering the company's honor and standing. and if i could just mention, ross, egyptian pound fresh record low against the dollar. keeping of course on that rol g rolling situation. still to come on the show, boeing hit more tush len. the dreamliner suffering another setback. we've seen one of the heaviest volume days in boeing stock for about four, five years. we'll have details coming up.
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problems appear to be piling up for boeing after japan's all nippon airways said it was canceling a 787 dreamliner domestic flight due to problems with the computer brake system. this after boeing shares nearly dropped 5% over the last two days following incidents on two separate dream liners operated by japan airlines in as many days. a fuel leak forced one aircraft to return to boston's logan airport yesterday. a day after an electric fire was discovered on a different aircraft heading to boston from tokyo. we have more from detroit. phil, good morning. thanks for joining us. how big are the implications here? we've seen one of the heaviest trading days in boeing's stock yesterday since 2009. >> huge implications, ross.
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i think right now we're at a point where investors are looking at this and saying, is there -- in t comes down to one question. is there a legitimate systemic risk to boeing because they may have problems with the production of the dreamliner. in other words, it is natural for there to be what we call teething pains whenever you bring out a new aircraft. everybody expects that. is that the case with these incidents, or are we looking at something much more profound here which is there's a manufacturing problem, there is a design problem with the 787 dreamliner. at this point, most people are saying we do not think that there is a more serious issue here in terms of a design issue for the dreamliner. having said that, we are now in the area of headline risk for investors of boeing. look what happens today. there's a canceled flight on a domestic flight in -- in japan
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for el nippon. that happens all the time but it will get attention because of the dreamliner. >> that's what we were going to ask about. all nippon saying it canceled a flight on computer brake system problems. you're saying this is more evidence of the headline risk that we're talking about as opposed to concern about this particular flight or something more deep going on here. >> exactly. it's the same thing that happened yesterday in boston. there's news video, breaking news reports, twitter is lighting up with a japan airlines flight that it canceled due to a fuel leak of a plane that is being ready -- ready to fly from boston to tokyo. immediately people say, aha, there's another problem with the dreamliner, here you go. you got a problem aircraft. fuel leaks happen all the time. it is -- i wouldn't call it common but it happens all the time in the world of aviation. they fix the leak quickly at the gate after they brought it in. plane took off, no problems,
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flew all the way to japan. having said that, we are in the area where people look at this plane and say what's going to go wrong next. it's going to take boeing time to get past this. >> each day bring new challenges. phil lebeau from detroit on the latest. we should mention calling from detroit because he has been seeking with general motors' ceo. that will play out at 10:10 eastern time. >> thank you very much. the commercial airline sector, the boeing's customers, showing no signs of slowing down. the airline index up to a fresh 52-week high yesterday. the highest since january, 2011. large carriers among the big winners. >> there was a feature actually in "baron's" magazine predicting the industry is finally poised to take off after years of sluggish growth weighed down by labor disputes and high debt. and the article singles out delta as the best position to reward investors. >> joining us with more,
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portfolio manager at anc capital. good to see you. thanks for joining us. when we spoke -- >> how are you? >> i'm all right. when we spoke in november, the delta/virgin announcements going on, you said that there have now been a fundamental change finally in the airline sector after years of being the living dead. we now had a really investable asset class. and actually the -- see what stocks have done since you said that, as well. what happens now? have we gone too far? >> no, i don't think we've gone too far. i think, again, as i look at the industry and what delta is doing, the other carriers are doing, we're in a period where they're going to continue to earn, start to earn cost of capital, exceed that, have earnings in a sluggish economic growth. that statement by itself and the results, the empirical evidence is powerful. that was brought by the consolidation that we started a
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few years ago. that will continue. >> do you agree that delta is the best positioned? if you like them, how important are dividends to the thesis? >> i think delta's very well positioned. i think they had a head start with the merger with northwest airlines. you had richard anderson running delta who also was running northwest airlines. so you had familiarity on both sides where you did the deal versus united continental. i think as you look forward, i don't think dividends are that important. i would rather see them take capital and do share buybacks and shrink the capital base. i think dividends for that company will be irrelevant. what happens is when you pay dividends, boards get whetted to dividend policy as part of their capital budgeting plan as they talk to the management running the company. i'd rather see them do buybacks if there's an opportunity for some consolidation, ala virgin, a la the refinery. if you don't have a dividend,
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you can either slowdown a stock buyback and use capital to buy the strategic assets and invest in those assets. i do not want to see a dividend. >> great point. i wonder, too, the big concern for delta or other airlines really comes down to pensions. they may have time before they need to be fully funded, but it's a significant challenge that at least on the -- in terms of their been sheet. how do they navigate -- their balance sheet. how do they navigate this going forward, can investors look beyond it? >> what delta did and this was on the northwest side, in 2005 they got relief from the senate. they were lobbying the senate so they can preserve their pensions and bankruptcy which is very rare, northwest did it fully. delta did it for most of their guys excluding the pilots. the pension, the way it works is 2031, it has to be funded. they have a special rate which is 8.85%. so the liability, let me rephrase this. the cash they're paying out per year is about 600 to 700,
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manageable for the company. you're not going to see the number come up. i'm not worried at all. >> okay. >> if rates do go up, the liability on the balance sheet goes down dramatically. that's a big deal. >> 2031 -- >> i'm not worried at all. >> 2031. >> incredible figure. portfolio manager at anc capital. arthur, appreciate your time. >> good to see you in boston. still to come on the show, alcoa eases fears over global growth in solid earnings. we'll tell you more.
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welcome back to wrecks wrec-- to "worldwide exchange." alcoa kicks off earnings season with good results, seeing brighter days ahead. bank and telecoms doing better. the reports that europe's biggest teleco groups in talks to create a pan digital network. sprint's plans to buy clearwire, a wrench in the plans. and a report suggests the bank of japan will likely cave in to heavy pressure from prime minister shinzo abe to double its inflation target to 2%.
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quiet trading session overnight. u.s. futures expected to bounce a little at the open, adding 20 points on the dow. similar magnitude for the nasdaq and s&p 500. now asian equities were helping to buoy global stocks, the ftse 300 up, but the european borses, mixed picture. the dax among the underperformers. the ftse 100 up, the dakotas dakotas up .1%. it is at a level of 7,703. coming off a year in which it was up 30%. the cac one of the strongest performers yesterday, addi adding .1%. and the ibex, despite the concerns we've been talking about with regard to the spanish economy, in particular the outlook for unemployment to continue rising from its already high 26.6%, look at this -- up .6% today. ross, shrugging it off. >> yeah. there we go. so that moving higher there. alcoa also swinging to a fourth quarter profit, matching
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forecasters' results. stabilizing raw aluminum prices or aluminum as kelly says. higher sales to the aerospace sector and cost cutting. revenues were down 1.5% to $5.9 billion, but that had also beat estimates. alcoa slightly boosting its 2013 global demand forecast to 7% from a previous 6.5%. the ceo class kleinfeld says growth is coming back and europe doing better that expected. after hours in new york, stocks up 2.3%, frankfurt trade. joining us is senior metals and mining analyst at clsa. david, the stock tracking a little bit higher. what's your own thoughts? >> i'm not as excited as some other people. i mean, you know, everybody's talking about the 7% global demand growth. you know, it was 6% in 2012. most of the global demand growth is coming from china. at the end of the day china can produce its own aluminum, hence
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its own system. so i'm not as excited as what you guys have been saying this morning. some of their big end markets like aerospace still growing at 9% to 10%. that's down from 13% to 14% last year. still good numbers, but again, i think the big thing is that china is most of the growth, and china has its own aluminum. so i don't know how that helps significantly to alcoa. >> presumably aluminum prices down 11% roughly in 2012. they need to get prices higher. that is looking illinois at the mome -- looking unlikely at the moment. >> it's about the aluminum price. they're doing things like cost cutting and things, except aluminum's about 91 cents. i don't know what it's doing this morning, 91 cents as of last night. they need the aluminum price to get back over a dollar. even with their 7% global demand forecast, they're calling for a 500,000-ton surplus in 2013. it's hard to see prices moving significantly higher if we have a surplus.
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>> david, overcapacity has long before a concern in the industry, capping aluminum prices and the shares to some extent. a lot of it, too, comes down to china as you mentioned. if you rely on that country to rightsize or reduce capacity and yet it has its own prerogatives, why would you bet at this point on the fact that prices or -- will go up or that supply will come down? >> i wouldn't be betting on it. i mean, i was there recently, and basically capacity -- they're producing about 20 million, 21 million tons now. in the next two years, they'll have capacity for over 30 million tons. they're not going to slow. they needed it for the local government for gdp growth. we're not going to see any shutdowns. any of the new production they're bringing on is lower cost type of production in the west because it has its own power source. it's not -- you know, doesn't need high cost power in which we see on the east coast. so i don't see the price -- the price can move higher just because of markets, but at the end of the day, i don't see it enough to get alcoa going from $9 or higher. >> yeah. and david, what is china doing
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to -- ing -- planning to do with their stockpile and production? >> the strategic reserve board just bought 100-pltons, trying to keep people afloat. they're giving subsidies from the local governments to some of the aluminum smelt force keep them going. again, they have stranded coal in the western part of the country. it's too expensive to ship the coal to the east. what they do is they build power plants and build aluminum smelters on top of it, they can ship. that that's what they're doing. keeping -- you know, keeping production going because they need to. >> all right. david, good to speak to you. david lipschitz, senior mining analyst at clsa. >> we'll see if the move fades after the initial rally. want to bring you the result. germany has auctioned off five-year -- that would be february, 2018, the offer to cover ratio and average yield 0.35%, a total of just over four billion euros worth of the february, 2018, bauble.
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>> big question -- are you feeling woozy? are you? are you -- >> i think i -- >> we both are this morning. >> i should ask myself. or nauseous -- >> is that why they gave you this read? >> you say nauseous, don't you? we say nauseous. are you burning up it? it might be the flu. it arrived earlier than expected this winter. health experts say it's hitting people much harder this year. >> my brother included who immediately coming to visit upon the holidays caught the flu. there's reason to beware. as cnbc's bertha coombs reports, there are also opportunities to profit from the virus. >> reporter: the centers for disease control's most recent report shows 41 states with elevated flu levels around new year's day. a lot of analysts watched google's flu tracker which looks for searches related to flu terms for real-time indicator. overall, flu searches up some 200% from the three-year average this time of year. search activity is most intense
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in north america, as you see, in the u.s. in particular. lots of red and orange, that's high to intensity, to really intense intensity. uals moderately high in the -- also moderately high in the eurozone, as well. as a key provider of flu shots in the u.s., walgreens is seeing a modestly outsized benefit from higher demand for shots. drug stores also benefit from higher flu medication sales. sales are strong for roche's tamiflu. influenza anti-viral treatment. the drugmaker is having trouble keeping up with demand. in canada the government announced tuesday it was releasing stockpiles from the nation's emergency supply because of shorjs. lots of -- shortages. lots of runny noses should mean higher sales for kleenex maker kimberly clark and procter and gamble who makes puffs. after slower unit sales the same quarter a year ago. because of the mild 2012 season, cold and flu season also important as a sales driver for helen of troy which makes vaporizes and thermometers.
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lee rink swann analysts think diagnostics firms like whole logic could see strong demand from more people seeing doctors who ordered tests in the fourth quarter. and with influenza-related hospitalizations up sharply, hospital zovolumes could be stronger this quarter. management associations, community health, and hca have more than 80% of beds in the states with the worst flu levels here in the u.s. with all of the increased medical spending, insurers could take a hit on higher costs. the estimate is that the peak of flu season is still about five weeks away. for more, check out my story on now back to you. >> that was bertha cook. we've been doing a geography lesson looking at the map. >> arizona -- look at all the states around arizona. pale orange. arizona is almost pinky -- what's going on in arizona compared to its neighbors? >> still don't think it was as red as most of the middle of the country. >> the northeast that was -- >> more pink.
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>> it was different from the neighbors. actually this time of year -- >> here i am -- >> you should be playing golf. >> this says aggressive nasty flu hit arizona. although it was in the "phoenix business journal." might be a home bias to reporting. >> two days ago. >> it is troubling. how many people do we know that have had the flu here and elsewhere? the cases in britain were up 70% from a year ago. scary stuff. >> a traditional thing, flu. >> great. >> you put out the holly, get the christmas tree and get the flu. it's what happens. >> i'm glad we were able to participate in that british custom this year. as mentioned earlier, dish network is looking to outrun sprint with a bid for clearwire. more coming up. ♪ ♪
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♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it. you are watching with the worldwide exchange." find out why the rate setting meeting could mark a key moment in the eurozone debt crisis. forget alcoa and the u.s. earnings season. what you should be watching for is europe's corporate performance or so says someone who we've quoted over this. now you can check out the latest on the online hacking of u.s. banks and why the u.s.
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government thinks iran is behind it. ross? >> i think my mother said it. for clarification. >> i was trying to tease, you know. find out who said that. >> my mother, she says a lot of good things. i should get her on twitter. >> she should be on the show. >> an instant hit. besides, there are telecom companies here, one of the best sector performers on the dow jones stock 600. my mother called in to talk about it. here we go, telecoms up 1.7%. the reason, they're reportedly discussing the idea of creating a pan-european telecom. this is an art that says the firms see the current system as disjointed and hindering their ability to compete. now there's this idea of sharing infrastructure. that's been discussed at a private meeting to the e.u. chief and bosses of europe's biggest telecom groups. telecoms best performer. retail the worst to date. disappointing christmas sales
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numbers. back to you. >> all right. thank you very much. if you're just joining us here on "worldwide exchange," alcoa eases global growth fears with better than expected earnings. european shares cheer the upbeat start to the fourth quarter earnings season. and dish network outruns sprint for an offer with clearwire in to a bed to grabl valuable spectrum. dish network is making an unsolicited $2.3 billion offer for clearwire, trumping a $2.2 billion bid by sprint nextel for the wireless provider. dish is now aiming to over $3.30 a share. sprint's offer was $2.98. sprint is clearwire's majority shareholder and wants to buy the rest of the country. clearwire says dish's offer is only preliminary. but the deal would require sprint's approval. sprint says the offer isn't viable. they're unlikely to give it. some analysts say the bid confirms that dish chairman charlie ergen is serious about becoming a wireless provider.
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other say he's amassing spectrum to flip for a big profit. the relative stocks, though, does mean clearwire up 10% in frankfurt trade. dish down slightly along with sprint nextel. >> that's adding it was up 8.9% in after-hours trade. he announced this at the consumer electronics show, adding to speculation over what the motives are. >> i can't go through the sprint -- what is sprint prepared to say yes? and so they -- >> which has a lot to do with soft banks saying yes. that was one of the biggest m&a deals of 2012. >> thank you. and we got this -- this was sort of the -- chat was coming through the markets yesterday, wasn't it? we saw the yen actually weaken a bit on this, news that soft bank might not go through. the dollar/yen weakened, not the yen. the -- >> the dollar -- yes. >> the yen wouldn't be flowing into america. is the answer. if sprint has the deciding interest on it, not going anywhere. >> it comes down to the value as some analysts the end in hertz per pop.
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is -- the megahertz per pop s. it worth 40 cents megahertz per pop or 20, the single digits that some argue the sprint value was at. undervaluing clearwire, should shares at $3 be trading up to $5 and how would that affect a bid? at the time one wells fargo analyst noted that part of the reason this was going to go through is because there was one logical buyer. now dish is coming forward with a better offer. it may not be the last that we hear. >> i want to ask you to explain megahertz per pop. >> bandwidth per number of persons in a market. >> you did it. got the test. brilliant. >> pretty much. now the tech wars at ces aren't just about hardware and market access. there's a battle brewing on the internet streaming side. we have the details. >> reporter: so many of these devices here at ces are designed to stream content. and it's a war. digital players like netflix along with cable and satellite tv providers, they're all fighting to make their content stand out. so they're launching flashy mobile apps and new bells and
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whistles designed to hold on to subscribers in a competitive commoditized environment. netflix is testing streaming in 3d, plus new personalized profiles to allow each family member to manage her or his own queue and receive individual recommendations. , tube is making it easier to watch its videos on tv. its app allows users to pick videos to watch on their screen. cable and satellite tv companies are fighting back by going mobile and embracing internet access and integrating internet content. cox and cisco developed new technology to brows live and on-demand content. and search for videos across the likes of netflix, as well. and dish is upgrading its hopper with sling-box technology. allowing subscribers to watch any show on any device anywhere and any time. dish's ceo says in a world where distributors can't differentiate with content, they have to distinguish themselves with cutting edge mobile technology. the goal is to make all these
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gadgets here at ces work for them and not against them. from ces, reporting for cnbc. >> all right. that's the latest from vegas. the ces conference. this is where we are ahead of the european stocks. the ibex in spain up .2%. the xetera dax and cac flat. >> the u.s. futures sitting roughly unchanged. dow trying to add 17 points. what's remarkable, as of yesterday, dow jones industrial average up 7.25% this year. it's, what, january 8? remarkable. >> yeah. >> plenty more coming up. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground
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we can afford to take an extra trip this year. first boston... then san francisco. hotwire checks the competitions' rates every day so they can guarantee their low prices. so our hotels were half price. ♪ h-o-t-w-i-r-e... ♪ your financial advisor should focus on your long-term goals, not their short-term agenda. [ male announcer ] join the nearly 7 million investors who think like you do. face time and think time make a difference. at edward jones, it's how we make sense of investing. welcome back, a couple of stories to keep you up to date
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on. aig says it has an obligation to consider a demand by former ceo hank greenburg to join his lawsuit against the u.s. government. the company board is meeting later today. greenburg's suit claims the u.s.' $182 million bailout of aig deprived shareholders of billions because they took a 92% stake and imposed high interest rate as part of the package. the fed is reportedly considering a plan to help big foreign bank avoid costly new regulations aimed at preventing derivative trades from being subsidized by u.s. taxpayers. "the financial times" says changes stem from the lincoln amendment included in the 2010 dodd-frank law. prohibits banks that have access to the federal deposit insurance or fed credit from acting as derivatives dealers. u.s. banks will still be able to trade some products like interest rate swaps, but under the current rule, foreign banks would be forced to move their u.s. derivatives activities off their books. >> we'll see where that happens. apple is working on a cheaper iphone that might hit the market sometime this year. the "wall street journal" suggests the device may use less
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expensive materials. oh, no, a plastic shell. this would mark the first time apple has diversified its smartphone lineup with significantly different models since it launched the first iphone all the way back in 2007. what a game-changing moment that was. >> i don't think i was born then. >> no. >> staying with mobile phones for the moment. microsoft says sales of windows 8 have hit the 60 million mark. ten weeks after the launch of its new operating system. that's roughly in line with sales of windows which came out in 2009. microsoft wouldn't say how many surface tablets which are equipped with windows 8 it has sold. the company introduced the touchscreen tablet as a competitor to the ipad. microsoft shares there are outperforming the market, up .6% in frankfurt, down, though, 11% in the last couple of months. now let's look at the agenda in the u.s. quiet, no economic data or fed speeches. just a few earnings reports on the calendar. wine and beer distributor constellation brands, shaw
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communications, and products maker helen of troy along with texas industries among the reports to watch for. joining us is chad morganlander, portfolio manager at stifel nicklaus. we want to get your initial take on alcoa's results and the outlook as it's shaping up for earning season. >> good morning. well, it looks as if alcoa's earnings were somewhat better than expected. in particular on the revenue front. and this is going to be a story for 2013 for alcoa. as you see the global economy reaccelerate, in particular china. >> now we've talked with analysts on this program, chad, about whether to really believe that this is going to happen given some of the overcapacity issues plaguing alcoa. are these companies specific issues, is there a read-through from results or as we've seen in prior quarters, is it the case that, you know, as alcoa goes, everyone else tends to go the other way? >> right. you know, alcoa's a global growth story. it's a base metal company.
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so as you start to see global growth reaccelerate where 2012 it was decelerating, then alcoa will go higher. now, you know, look, they have their problems. they have a product mix that they're trying to get to a higher margin, more stable business to balance out their business line. but really it is a global macro play. and it's a high beta stock. that's why investors want to be in that company if they think the global economy's going to reaccelerate. >> yeah. we've got to see whether the price goes up, as well. chad, what about -- here we go. kelly saying the down, what, 7% in the first start of the year. that's quite a start. does that continue? >> yeah. you know, we're thinking that it's going to be a bumpy ride for the first half of the year. you're going to have global gdp reaccelerate, 3%, 3.5%. united states gdp should be around 2%, but it will be dead in the water for the first quarter to second quarter.
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and then reemerge ag you start to see capital spending kick in. as well as the housing market starting to improve in the united states. so that should bode well for -- for the broader markets on a global basis. and here in the united states, you know, you should see about 7% to 8% total return. we're basing that off of earnings of around $105 for s&p earnings for 2013. >> there are plenty of risks, chad, including what happens with the debt ceiling negotiations. if we could just get specific here, where are some of the places you think investors can kind of ride out some of the volatility? >> you know, so we're looking at technology stocks because they're very, very cheap at this point in time, as well as consumer discretionary on the big mega cap stocks. so for instance, walmart, very good company. blue chip company, growing profitable, well capitalized, has a rising dividend of roughly 20% over the last five years. you also want to look for technology companies.
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you know, the technology stocks are ridiculously cheap. apple, $525 price. they have $125 of cash their balance sheet per share. and you know, they're earning probably about ten times this year's earnings. cisco, for example, 12 times next year's earnings. >> okay. >> over 2012. these are all very cheap companies, good quality companies. they should be able to ride out turbulent times. and also get some upside if we hit that price target of 15.50 on the s&p. >> chad morganlander, we'll have you back to follow the year as it progresses. thank you very much for joining us this morning. >> that's it for "worldwide exchange." coming up next, "squawk box" and the countdown to the u.s. open. with the spark cash card from capital one, olaf gets great rewards for his small business! pizza! [ garth ] olaf's small business earns 2% cash back on every purchase, every day! helium delivery. put it on my spark card!
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Worldwide Exchange
CNBC January 9, 2013 4:00am-6:00am EST

News/Business. Ross Westgate, Kelly Evans. Ross Westgate and Kelly Evans consider the business stories that have global significance. New.

TOPIC FREQUENCY U.s. 56, Alcoa 28, Europe 20, China 20, Us 18, Spain 16, Ross 10, S&p 9, Boeing 8, Ubs 8, Boston 7, Frankfurt 5, Cnbc 4, Greece 4, Arizona 4, Britain 4, Asia 4, Chad 3, Delta 3, Tokyo 3
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